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Episodic memories are contextual experiences ordered in time. This is underpinned by associative binding between events within the same contexts. The role of prediction errors in declarative memory is well established but has not been investigated in the time dimension of complex episodic memories. Here we combine these two properties of episodic memory, extend them into the temporal domain and demonstrate that prediction errors in different naturalistic contexts lead to changes in the temporal ordering of event structures in them. The wrongly predicted older sequences were weakened despite their reactivation. Interestingly the newly encoded sequences with prediction errors, seen once, showed accuracy as high as control sequences which were viewed repeatedly without change. Drift–diffusion modelling revealed a lower decision threshold for the newer sequences than older sequences, reflected by their faster recall. Moreover, participants' adjustments to their decision threshold significantly correlated with their relative speed of sequence memory recall. These results suggest a temporally distinct and adaptive role for prediction errors in learning and reorganizing episodic temporal sequences. [ABSTRACT FROM AUTHOR]